In March of 2017, 70% of all online ad revenue was consumed by Google and Facebook. That changed when a furious group of online advertisers formed a coalition to persuade ad agencies and brands to switch their spending. The action came in the wake of a brand safety scandal that was engulfing Google.

Advertisers moved to protect their brands

Advertisers were horrified to find their ads placed in front of videos on Google’s YouTube that most considered extremist. Google responded stating that it has “strict guidelines” dictating where ads could appear. Moreover, the company contended that the ads only appeared against content that violated the policy “a very small percentage of the time.”

Google’s reassurances did little to dissuade more than 1,200 companies, including the government of the UK, from withdrawing their ad spending. ‘Indefensible’ was the cry from many of these brands. The growing coalition of angry companies and loss of revenue put pressure on YouTube to make changes to protect its advertising business.

And change it did!

Rock and a hard place

With so much backlash, YouTube made some serious alterations. No channel under ten thousand views could display ads, and much stricter algorithms were put in place to vet the content. All videos that were deemed unsuitable for advertisers after being evaluated by this algorithm were ‘demonetized.’ Although this had been in practice since 2012 the new changes, coupled with notifying the creators of these videos, created a backlash.

The result of this video purge was that thousands of creators had many of their videos demonetized and saw their YouTube revenues shrink. Philip DeFranco, a popular current events blogger, saw a 30% drop in his ad revenue. Groups with seemingly pure intentions also took a hit. Women Real Stories, a charity project dedicated to sharing women’s stories of abuse, dropped from $2,000 to $10 in revenue. Their YouTube channel, although designed to help and aid women who have experienced severe trauma, could no longer be sustained.

It remains unclear whether the videos were inappropriate in the first place. For example, YouTube banned some language versions of translated videos while allowing others to pass. Though there has been an appeals process in place, most see it as slow and inefficient.

It seems YouTube could not appease either its advertisers or its creators.

New Territory

Advertising in user generated videos has been around for more than a decade. However, widespread use on the scale seen recently is unprecedented. Moreover, like any new medium, it will take time to equilibrium.

Since the “crisis” earlier this year, the problem is still ongoing for many creators, although for many revenues appear to be recovering. By late May revenue for many of the top creators approached pre-March levels. At a recent convention hosting the top 100 YouTubers, only four stated explicitly that their revenues had still not recovered.

Advertisers, as well, are slowly starting to return to YouTube to promote their brands.

It seems that the platform is improving, but there are still problems. With over 400 hours of video uploaded to YouTube every minute, it is impossible to monitor every video perfectly. The only way to handle that volume of video is with better algorithms.

“YouTube is trying to balance the needs of advertisers with the needs of creators. Do they always get it right? Of course not,” said Steven Oh, COO of The Young Turks Network. “It’s a very tough balance to strike, and just as advertisers push for their interests to be protected, creators should do the same.”

Why it matters

Thousands of companies cut or eliminated their ad spending from YouTube due to questionable content.

Thousands of creators had their revenues cut or eliminated because of YouTube’s attempt to fix the problem.

Now the initial hysteria has died down, companies and creators are settling back down to the business of ad supported video. Expect further bumps along the road.